That's not really equivalent. In a fractional banking system, even if a loan is entirely "newly created money," it's not without strings: it's a loan, that needs to be paid back.
Someone wants to buy a house, the bank creates $500k "out of nothing" and the two parties enter into a loan. For the buyer, their $500k asset (bank money) is balanced by a $500k liability (mortgage). It's symmetrical for the bank: a $500k liability (bank deposit) is balanced by a $500k asset (loan). Once the loan is paid off, the balances go to zero and that "new money" has effectively been completely destroyed. What the loan issuer gets in compensation, of course, is the interest.
Even with QE, when central banks "print money" to buy distressed assets, they are buying assets, not handing out new money no-strings-attached. And that new money is listed as a liability on their balance sheet, with the purchased assets balancing it on the other side.
Monetizing social security would break this balance. A central bank would create new money, adding it to their liabilities, and then give it away, receiving... nothing? The money supply would continuously increase without a corresponding sink to "suck it back up." That would (1) lead to inflation, thus (2) requiring more money creation for retirees to keep up with increased prices; goto (1).
In order for something like this to work, you would need some kind of sink. That could be done with taxes. But then we're sort of back where we started. The central bank wouldn't be monetizing social security no-strings-attached, but creating money with a promise from the government that it will tax the economy sufficiently to pay it back. It would just be another loan.
> A central bank would create new money, adding it to their liabilities, and then give it away, receiving... nothing?
Central bank would get government bonds, as you mentioned. Of course, the lions share needs to be offset through a cut from a country's economy, however you organize it (taxes, social security), and bonds cover the variations over a few generations. But there is no real upside when handling that via middle men.
Someone wants to buy a house, the bank creates $500k "out of nothing" and the two parties enter into a loan. For the buyer, their $500k asset (bank money) is balanced by a $500k liability (mortgage). It's symmetrical for the bank: a $500k liability (bank deposit) is balanced by a $500k asset (loan). Once the loan is paid off, the balances go to zero and that "new money" has effectively been completely destroyed. What the loan issuer gets in compensation, of course, is the interest.
Even with QE, when central banks "print money" to buy distressed assets, they are buying assets, not handing out new money no-strings-attached. And that new money is listed as a liability on their balance sheet, with the purchased assets balancing it on the other side.
Monetizing social security would break this balance. A central bank would create new money, adding it to their liabilities, and then give it away, receiving... nothing? The money supply would continuously increase without a corresponding sink to "suck it back up." That would (1) lead to inflation, thus (2) requiring more money creation for retirees to keep up with increased prices; goto (1).
In order for something like this to work, you would need some kind of sink. That could be done with taxes. But then we're sort of back where we started. The central bank wouldn't be monetizing social security no-strings-attached, but creating money with a promise from the government that it will tax the economy sufficiently to pay it back. It would just be another loan.